Q&A on Fairtrade International and Fair Trade USA

In September 2011, Fair Trade USA (FTUSA) announced resignation of its membership from the international Fairtrade system as of 31 December 2011 (Please see the joint announcement)

Fairtrade International is dedicated to a strong global Fair Trade movement, a global system of Fairtrade Standards and certification, and we strongly believe in the power of an internationally recognized FAIRTRADE Certification Mark. We believe by working together we are always stronger than we are alone, and will work closely with our partners and supporters to achieve our common vision of trade justice for farmers and workers.

We are positive there will be many questions around these new developments and we hope to answer some of them below. If you have other questions or comments, please don't hesitate to send us an email questions@fairtradeamerica.org.

FTUSA announced their decision to leave the international Fairtrade system in early September and withdrew their membership as of December 31, 2011. Fairtrade International’s paramount concern remains to ensure that the benefits achieved for farmers and workers continue, and to increase our impact over time.

What has the international Fairtrade system done on the issue in the USA?

When FTUSA first left our system, we decided that the best option would be to listen rather than reacting quickly to help us understand the market and the possible options available, as well as protect the interests of producers. The USA is a large, but mostly untapped, market.

The dialogue and the opinions expressed demonstrated a desire for the international Fairtrade system in the US market. A demand was discovered for a multi-stakeholder system that truly respects the position of producers and all stakeholders.

Since then we have established Fairtrade America, a new organization to maintain the international Fairtrade system in the USA and promote the international FAIRTRADE Mark - the only mark that ensures that products bearing it meet internationally-agreed Fairtrade Standards.

How did Fairtrade producers react to FTUSA's announcement?

Producer Networks, which represent the interests of Fairtrade certified small-scale producers, workers and other stakeholders, are concerned about the changes in the global Fairtrade system and the departure of Fair Trade USA (FTUSA).

Fairtrade International’s utmost concern is providing farmers and workers with increasing opportunities to improve their own livelihoods through better trade terms. We are working hard to ensure that FTUSA’s decision does not adversely affect producers wishing to sell into the Fairtrade market in the US. We’ll make sure that everyone committed to working with the global Fairtrade system will be able to do so.<ins></ins>

For producers selling to US-based companies that are registered with the international Fairtrade system, there will be no changes. For producers selling to businesses registered with other schemes, FTUSA continues to accept FLO-CERT certification as valid for sales into the USA market, but producers should be aware that FLO-CERT will not be able to check the delivery of Fairtrade Premium, nor monitor the delivery of product into the US market.

Otherwise the international Fairtrade system will continue to operate as normal. Over 40 percent of our budget goes in to producer support to help producers enter and stay in the system and access technical support. We will also continue to operate our Producer Certification Fund, which provides grants of up to 75 percent of certification fees to small producer organizations who lack financial resources to pay the full amount. This fund is only possible through our national Fairtrade organizations, who contribute a percentage of their membership fees to the PCF. We also recently announced the Fairtrade Access Fund, which will provide long-term loans to small producers, read more here.

If you are a producer and have any questions or concerns, please get in touch with your contact at PSR, your local producer network or send an email to questions@fairtradeamerica.org.

How will FTUSA's departure from the international Fairtrade system impact my business?

As of 1 January 2012, FTUSA is no longer the US representative of the international Fairtrade system, certifying to the internationally agreed Fairtrade Standards.

If you are a US-based licensee or importer, or if your supply chain includes US-based traders, FTUSA’s decision could have important implications for your business.

This will have some implications for cross-border sales, for example. While we are committed to supporting businesses to remain within the global Fairtrade system, as of June 1, 2012, we will no longer be able to accept FTUSA’s certification for sales into other Fairtrade markets under the FAIRTRADE Certification Mark.

To maintain the integrity of the global system, we need companies to register with an approved member organization. In the immediate term, the easiest way to do this is through Fairtrade Canada, which has been mandated by the International Fairtrade System to operate as an LI in the US until December 2013. For companies registering with Fairtrade Canada before 31st of May 2012, there will be no application fee charged to US businesses who are currently registered with FTUSA.

We will do everything to make the transition as easy as possible and to ensure there is still a full service product certification, licensing and account management service, and marketing support available to those who wish to sell certified products in the USA in line with the global Fairtrade system.

We recognize that it may take time for businesses to adjust to the new situation, and we will be as flexible as possible while ensuring the integrity of the Fairtrade Standards and system.

Fairtrade Canada will be helping out in this interim phase as we work with you to establish a transition strategy. Please email them at license@fairtrade.ca.

Why will FLO-CERT not check on my sales destined for the FTUSA labelled supply chains? Does this mean my company needs another certification to sell in the USA?

FTUSA made a decision to leave the international Fairtrade system at the end of 2011. A consequence of that decision is that FLO-CERT can no longer provide services to FTUSA.

For companies that decide to register with Fairtrade Canada and use the international Mark in the US market, there is no need to seek another certification. Please contact license@fairtrade.ca for more information.

Companies looking to sell through FTUSA need to consult FTUSA for details.

What does this mean to me as a supporter in the US?

Fair Trade organizations and members of the grassroots Fair Trade movement, including Fair Trade Towns and universities, faith groups and NGOs, have been an integral part to the growth of both Fairtrade certification in the US and to campaigning for trade justice for farmers and workers around the world. We strongly believe that by working together we are stronger than we are alone.

We will create new opportunities to hear back from partners across the movement over coming months, and ensure that the US Fair Trade movement’s voice is heard even more strongly within the global Fairtrade system. We want to ensure that whatever we do takes into account the insights and concerns of the Fair Trade movement in North America.

Will the international FAIRTRADE Mark now be available for products in the US?

There has been growing demand from many companies to use the international FAIRTRADE Mark in the US for quite some time. Research by Globescan shows that the FAIRTRADE Certification Mark is now the most recognised ethical product label in the world. Most recently, Fairtrade Canada adopted the global FAIRTRADE Mark, and has seen public recognition grow very quickly.

For the first time in history the FAIRTRADE Mark is a truly global mark and available in all countries. Fairtrade International is currently in the process of establishing a legal presence in the US to facilitate the launch of the FAIRTRADE International Mark in that market.

To learn more about the FAIRTRADE Mark and how your US-based company can remain in the international Fairtrade system, email license@fairtrade.ca.

Why is Fairtrade International introducing a new organization in the USA?

Throughout our dialogue with stakeholders in the USA, we heard from many businesses wishing to remain part of the global system and others hoping for an organization that espouses the values of the international system. All recognized the value of a global system with internationally-agreed Fairtrade Standards and a strong, credible certification system.

With these wishes in mind and the support of key civil society actors, businesses and others, we have decided that there is a role for the international Fairtrade system in the US market.

In addition, a legal presence is needed in the USA to help businesses remain in the international Fairtrade system. Please visit Fairtrade America for more information on our efforts in the USA.

Will Fairtrade International work to create a Fairtrade marketing organization or labelling initiative in the USA?

The USA is the world’s largest consumer market. Any decision on the organizational structure will need to consider the unique needs of the US market.

Fairtrade International is not committed to any one of the current models the international Fairtrade system currently works with. A stakeholder group in the United States has been formed to help guide the international Fairtrade system in creating and developing an organization that addresses the needs of the USA market and will represent the diverse group of stakeholders who will contribute to its success.

Will the presence of the international FAIRTRADE Mark in the Unites States create more confusion among consumers?

The United States is the world’s largest market and Fair Trade sales currently represent just a fraction. Fairtrade Canada recently introduced the international Mark in Canada and experienced great success in building widespread recognition in just one year. Initially there may be some confusion, but we are confident that our business partners will recognize the distinct benefits of working with a truly global system with internationally agreed standards and a globally recognized mark.

What makes the Fairtrade global system unique?

The Fairtrade system is one of the largest and most diverse global movements with thousands of relationships in over 90 countries. We have members in Europe, North America, Japan and Australasia, not to mention producers in over 60 countries worldwide.

We are committed to a multi-stakeholder, multilateral system, particularly regarding the involvement of producers in governance and decision-making. Fairtrade producers are represented as members in our highest decision-making body, the Board of Fairtrade International and its committees. Through these mechanisms, producers are involved in decisions regarding overall strategy and the setting of Fairtrade prices, Premiums and Standards. Producers are co-owners of the Fairtrade system.

Where is the Global FAIRTRADE Mark used and known?

We estimate products carrying the global FAIRTRADE Certification Mark are now sold in over 70 countries worldwide, including North America, Europe, Japan, South Korea, Australia, New Zealand, Kenya and South Africa. This makes it the most widely recognized ethical label in the world. Recent consumer surveys across 24 countries show that almost 6 in 10 people have seen the international FAIRTRADE Mark and recognition exceeds 85 percent in some markets.

How does Fairtrade International link in to the global Fair Trade movement?

We are proud to be an active partner in the grassroots Fair Trade movement, working alongside activist groups, dedicated Fair Trade Organizations, local town authorities, faith groups and NGOs to build one of the world’s most dynamic social change networks active today, with over 1000 Fair Trade Towns

In 2009, Fairtrade International (FLO) along with the World Fair Trade Organization adopted the Charter of Fair Trade Principles, which provides a single international reference point for Fair Trade. The charter includes our common vision, definition of Fair Trade, core principles and the distinct approaches to Fair Trade. Fairtrade International endorses the definition of Fair Trade and adheres to the Principles. Find out more here.

We work together with advocacy groups such as Fair Trade Advocacy Office in Europe, and work to actively promote greater justice in trade. We are proud of our collaboration with others and firmly believe that by working together, we are always stronger than we are alone.

What are Fairtrade International’s membership fees used for?

Member organizations of Fairtrade International contribute into the global Fairtrade system – this is being invested in international standards, policies and producer support networks. In the case of labeling initiatives like Fair Trade USA, the amount of investment was calculated as a percentage of the fees collected for the labeling of products certified to Fairtrade Standards.

Over 40 percent of Fairtrade International’s budget is directed to producers through producer services. This includes a global support network of more than 50 locally-based liaison officers who support producers in more than 60 countries to enter Fairtrade and maintain their certification; and development of partnerships with more than twenty outside organizations to provide additional training and services for producers, such as access to financing, market opportunities and capacity-building.

The rest is spent on maintaining the Fairtrade Standards, building awareness and sales of Fairtrade products in new markets, essential global services like coordinating global communications and marketing activities, and developing strategies on different products and issues such as workers’ rights and climate change.

We believe that sharing in one globally integrated system is the best way of driving efficiencies of scale, so that we can wherever possible avoid duplication of effort, and ensure resources can be directed to benefit producers as much as possible.

Why isn’t the international Fairtrade system working with FTUSA in the USA?

FTUSA took the decision to leave the international Fairtrade system. Even so, Fairtrade International held negotiations with FTUSA regarding outstanding financial issues and possible lines for collaboration in February. A suitable agreement could not be reached and FTUSA’s access to Fairtrade certification data has been revoked.

While the international Fairtrade system would prefer to work with FTUSA to minimize impact on producers and businesses, cooperation at this time represents a severe credibility risk to the international Fairtrade system.

All internationally-agreed Fairtrade Standards, Minimum Prices and Premiums are set according to the ISEAL Codes of Good Practice for Standard Setting. This includes an open and transparent standard-setting process and broad and balanced stakeholder engagement in the development and decision-making around the standard.

Since we are uncertain of the policies and procedures enacted by FTUSA regarding current standards and certification, collaboration represents a risk to the overall credibility of the international Fairtrade Standards and certification process. For this same reason, the international Fairtrade system will not recognize FTUSA certifications. In addition, FTUSA’s certification is not accredited by ISO65 and therefore does not meet FLO-CERT’s basic quality requirements.

What does Fairtrade International think about FTUSA’s new Fair Trade For All Initiative?

We recognize that there are many different approaches to Fair Trade. We absolutely share the overall vision of increasing impact for producers – both small farmers and workers and to working in collaboration with the broader Fair Trade movement , to ensure that our cumulative efforts will continue to strengthen producers’ position in international trade and improve livelihoods.

We also believe that Fairtrade needs to constantly learn from experience, and innovate for greater impact. However, some of the innovations FTUSA is implementing represent their perspective, which is different from that held by Fairtrade International and our members. You can read our more detailed response here.

Why doesn't the global Fairtrade system provide fair trade certification for coffee grown on estates and plantations when it provides Standards for other products grown on estates?

Different producers and different products have different needs. The Fairtrade Standards are developed according to the ISEAL Code of Good Practice on Standard Setting (www.isealalliance.org/code). Any changes to the standards are the product of in-depth research into benefits, opportunities, and possible effects on the supply chain. A consultation process involving all stakeholders – including producers and traders to retailers and civil society – informs this process.

In the case of coffee, most plantations do not have a permanent workforce. The workers are largely transient and it is difficult to ensure that Fairtrade benefits would reach workers in these situations. In addition, small-scale growers represent the majority of the world’s coffee production and are at the heart of the Fairtrade system. One of the strengths of the small producer organization is the promotion of independent, democratic decision-making, something that is difficult to promote among a transient workforce. Opening the Fairtrade system to plantations with large coffee volumes could also threaten small producer organizations that cannot operate on the same scale and all three of our producer networks recognize and voice the need for additional research.

In the case of tea, flowers and bananas, these crops tend to be year round operations with regular croppings that require a large permanent workforce. The workers often live on or nearby the estates with their families and neighbours forming a community that is able to benefit from Fairtrade Premiums. Our existing hired labour standards actively work to support long-term contracts, improved wages, workers’ rights and other benefits, something that would be difficult to replicate in coffee plantations currently.

All of this being said, there are many small producers not associated with cooperatives, as well as large populations of workers, that could benefit from Fairtrade. We are working with a producer network to determine how we can adapt the standards to help these small producers overcome barriers to entering the system, but any changes will be made in consultation with all stakeholders in the system. We also recently announced a new strategy on workers' rights for the areas where we do work with hired labour, read more here.

What will be the difference between FTUSA and Fairtrade Standards?

Fairtrade International remains fully committed to providing leadership on the development of transparent and internationally agreed Fairtrade Standards, led by our Standards Unit and independently overseen by an international Standards Committee, including representatives of producers, traders, NGOs and member organizations. We seek to operate according to best practices for international multi-stakeholder participation in standard setting, as laid out by ISEAL, of which Fairtrade International is a member. www.isealalliance.org

Each year Fairtrade aims to engage in more dialogue and become even more consultative, as evidenced by the unprecedented review of Fairtrade Standards with hundreds of stakeholders from over 50 countries, which led to the launch of the New Standards Framework.

As of 1 January 2012, FTUSA will be operating its own approach to the certification of Fair Trade products.We are not aware of FTUSA’s plans or how they will develop solid, credible standards.